Mortgage Rate Forecast for Sandwich MA for February 25, 2010
Here are some of the events affecting mortgage rates today in Sandwich, MA.
What Mortgage Backed Securities Are Doing Today:
- The price of the FNMA 30-Year 4.5% MBS coupon opened at 100.69 this morning - the same as yesterday's close.
- At 9:30, the 4.5% MBS coupon was trading at 100.84 - up 5/32 from its opening.
Price Trend in Mortgage Backed Securities:
The chart below shows the price trend of the FNMA 30-Year 4.5% coupon over the past 30 days from 1-26-2010 to 2-25-2010:
Remember, on mortgage backed securities (MBSs), as the price goes up, the yield comes down - and so do mortgage rates. I expect that mortgage rates will be 0.125% - 0.250% better in price this morning as compared to yesterday.
Economic Reports, News, and Events Affecting Mortgage Interest Rates Today:
- Durable Goods Orders Report - this report provides us with an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years. There was a 3.0% increase in new durable goods orders in January, much more than the 1.5% increase that was expected. This follows a 0.2% increase in November and a revised 1.6% increase in December. This report shows that the manufacturing sector is gaining some momentum. However, when the transportation component is excluded, new durable goods orders actually fell 0.6% after a revised 2.0% gain in December. This report had no impact on mortgage rates this morning.
- Jobless Claims - 496,000 new claims for unemployment were filed last week. This is 23,000 more than the previous week, 36,000 more than expected, and is the highest since last November. The four-week average for unemployment rose by 6,000 to 473,750, and continuing claims rose by 54,000 to 4.617 million. This suggests that the labor market is again getting worse. This data is usually not considered to be very important to the mortgage market; however, the increase in unemployment led to slightly lower mortgage rates this morning.
In other news, Ben Bernanke, Chairman of the Federal Reserve, delivered his report before the House Committee on Financial Services. Ben Bernanke reiterated his intentions to keep key interest rates low for the next several months.
Here is what Bernanke said about the discount rate:
"To discourage banks from relying on the discount window rather than private funding markets for short-term credit, last week we also increased the discount rate by 25 basis points.....These adjustments are not expected to lead to tighter financial conditions for households and businesses and should not be interpreted as signaling any change in the outlook for monetary policy, which remains about the same as it was at the time of the January meeting of the FOMC."
Here is what Bernanke said about jobs:
"Notwithstanding these positive signs, the job market remains quite weak, with the unemployment rate near 10 percent and job openings scarce. Of particular concern, because of its long-term implications for workers' skills and wages, is the increasing incidence of long-term unemployment; indeed, more than 40 percent of the unemployed have been out of work six months or more, nearly double the share of a year ago."
Yesterday, Ben Bernanke delivered his Semi-annual Monetary Policy Report before the House Committee on Financial Services. Watch Ed McKelvey, a senior economist at Goldman Sachs, share his reaction on CNBC on Ben Bernanke's Congressional testimony about monetary policy and the economy:
Ben Bernanke will deliver his Semi-annual Monetary Policy Report before the Senate Banking Committee today. But, it will be more of a Q&A session. According to analysts from Bank of Montreal (BMO), "The Q&A session will provide an opportunity to clarify issues that may have been misinterpreted by market participants. But really, the Chairman couldn't have been any clearer in saying that the Fed has no intention of raising policy rates for an ‘extended period'. And, given the sickening 11.2% plunge in new home sales to record lows in January, he's unlikely to stray from that message today."
The Treasure Dept. will be auctioning $32 billion in 7-Year Notes today. The Notes and Bonds are used to finance the massive government debt. If there is a strong demand for the Notes, we should see the bond market move higher (resulting in lower mortgage rates) during afternoon trading. However, a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to a broader selling in bonds and mortgage backed securities. The selling of mortgage backed securities could result in higher mortgage rates this afternoon.
What's Happening With Mortgage Interest Rates Today:
Moderate to High Volatility. Mortgage rates are again off their historic lows. It appears that the overall economy is improving. The Fed raised the discount rate last week by a 1/4 point. Also, the Fed continues to auction Treasury Notes and Bonds to pay for the increasing massive government debt, all of which contributes to the fear of inflation. In addition, the Fed is winding down their purchases of mortgage backed securities which is slated to end on March 31st. As such, there's very little potential for lower mortgage rates.
If you have not yet locked in your mortgage rate yet, please proceed with caution and maintain contact with your mortgage professional as mortgage rates can change for the worse - often without notice.
If you're happy with the interest rate being offered to you and if you don't want to risk mortgage rates moving higher, then you should apply and lock in today. It's better to have locked when you should have floated than it is to float when you should have locked.
Get current mortgage rates for Sandwich, MA.
East Bridgewater, MA 02333
Lew Corcoran, ASP®, IAHSP, IAHSP-CB